Medical device company Cesca Therapeutics (KOOL) , formerly ThermoGenesis prior to its merger with TotipotentRx Corporationin January, has spiked almost 30 percent after Maxim initiated coverage at a buy with a $7 price target. That’s 337.5 percent higher than the $1.60 a share closing price for Cesca on Wednesday.
Cesca gapped up to $1.80 a share at open and quickly took off, reaching a high of $2.19 in early trading. The stock has cooled off some since, retreating back below a resistance line at a little over $2, but it closed at $2.06 a share for a gain of 28.75 percent on the day.
Cesca, which produces devices used to harvest stem cells and other tissues for isolation and research, is a micro-cap company that featured a market cap just over $50 million prior to today’s pop. Such a strong vote of confidence, even from a single analyst, is likely to be able to significantly shift its market value. The company appears to be gaining traction, though, as institutional buying is up 85 percent over the last three months.
Shares exploded in late January, going from just over $1 apiece to a 52-week high of $3.24 a share after it produced statistically significant results in a Phase 1b treatment for a treatment for no-option patients suffering from critical limb ischemia.
A quick look at the DuPont Report for the company could indicate at least part of why Maxim is so high on the stock. The DuPont Analysis, which breaks return-on-equity (ROE) into three components to look deeper in the stat, shows that Cesca is well ahead of its industry average in terms of ROE and that the advantage is driven almost entirely by a huge advantage over its average competitor in net profit margin, a strong sign.
What’s more, Cesca is clearly trending in the right direction, with 2013 showing significant year-over-year improvement in both ROE and net margin. And its equity multiplier is trending up, towards the industry average, another strong sign.
The day’s trading did seem to indicate that a downward sloping resistance line that can be traced back to its peak on January 24 appears to still be holding strong. The day’s trading, though, does bring with it some bullish technical signals. The stock, which had previously been trading just above its 200-day SMA, crossed its 20-day and 50-day SMA from below.
This comes just two days after the MACD line crossed the signal line from below on April 22, and about four months after the 20-day and 50-day SMAs crossed the 200-day SMA from below as well.
On the whole, Cesca’s been in a downtrend while it retreated from its 52-week high, but the uptick in institutional buying, the endorsement from Maxim, and the technical factors all seem to indicate real potential that the company may be able to break past resistance in coming months.
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